Outlook for Public Infrastructure in South Africa in 2026: What PPP Project Sponsors Should Focus On
- Fulu Mudau
- 4 days ago
- 6 min read
For PPP project sponsors in South Africa—especially built-environment firms carrying delivery risk from award through to financial close—2026 is shaping up as a year of real opportunity, but also real execution pressure. Two signals matter most.
First, government has continued to reform how priority infrastructure is screened, funded, and brought to market—most notably through the reconfiguration of the Budget Facility for Infrastructure (BFI) and the introduction of a dedicated sovereign infrastructure bond programme that directly supports BFI projects. Second, Operation Vulindlela’s Q3 2025/26 progress reporting shows measurable reform delivery in the very networks and approvals that typically determine whether projects become bankable on time: electricity, freight logistics, water and sanitation regulation and licensing, and spatial integration (land/buildings release).
For sponsors, the practical takeaway is simple: the environment is becoming more investable, but you still have to convert that enabling momentum into financeable, procurement-ready transactions—and you have to solve the project preparation funding gap early.
The financing and approvals architecture is simplified for BFI-aligned projects
National Treasury’s first Infrastructure and Development Finance Bond issuance is not a standalone “nice-to-have” development— NT raised R11.795 billion, with bids exceeding R26 billion (a 2.2-times subscription rate), signalling strong demand for ring-fenced infrastructure exposure. Importantly for the pipeline, proceeds are to be used exclusively for BFI projects and Treasury intends to tap these bonds in future auctions to finance further BFI-aligned projects.
This matters for sponsors because the BFI was also reconfigured to run four bid windows annually (instead of one). Treasury links this change to enabling public institutions to request funding for part of a project’s cost as a basis to attract additional private funding, improve pipeline quality and scale, and embed private sector participation in delivery. In other words: expect more structured, repeatable funding touchpoints across the year, and more emphasis on co-financing and private participation.
In addition, the Government Technical Advisory Centre (GTAC) has simplified the requirements for Technical Approval 1 (TA1) for Public-Private Partnership (PPP) projects valued below R2 billion. By reducing administrative complexity, these changes can shorten early-stage delays and enable project preparation and procurement to move faster—provided governance, affordability, and due diligence remain robust.
For a sponsor, the implication is that a clearer, more bankable “center of gravity” is forming around NT/BFI-screened projects—where approvals discipline, funding windows, and a dedicated sovereign instrument increasingly reinforce one another.
Priority sectors are not isolated themes—they are being actively enabled through Operation Vulindlela reforms
Operation Vulindlela Phase II is a joint Presidency–National Treasury initiative to accelerate priority structural reforms that support growth and service delivery. Its Q3 2025/26 milestones map directly onto the infrastructure sectors that dominate most PPP and municipal delivery pipelines.
Electricity and renewables: bankability depends on market rules, grid access, and transmission build-out
In Q3, NERSA approved a Market Operator licence for the National Transmission Company of South Africa (NTCSA) on 27 November 2025. NERSA also approved Grid Capacity Allocation Rules (12 November 2025) to ensure fair, transparent access to limited grid capacity, and published draft Electricity Trading Rules (16 November 2025) to establish a clear regulatory framework for electricity trading. For sponsors in energy-adjacent PPPs, mixed-use precincts, or large public facilities, these are not abstract reforms—they directly affect connection certainty, offtake structures, and lender comfort.
Operation Vulindlela also notes that final Electricity Transmission Infrastructure Regulations were published on 31 October 2025 to facilitate private investment in transmission and improve grid reliability, alongside progress toward enabling private participation in transmission projects through the ITP Programme and related credit enhancement design work.
Freight logistics and rail: private participation is moving from policy into transactions
For sponsors exposed to logistics-dependent demand (industrial precincts, border facilities, corridor-linked developments), the freight logistics reform track is a major bankability lever. Q3 included the signing of a 25-year agreement between Transnet and ICTSI for Durban Container Terminal Pier 2, effective 1 January 2026, enabling investment of more than R11 billion and raising capacity from 2.0 million to 2.8 million TEUs. Operation Vulindlela frames this as the first major private sector participation transaction following the Freight Logistics Roadmap—a strong signal that “bankable transaction” execution is now part of the reform story, not just intent.
The report also points to the path toward open access and private train operations, noting that seven of the eleven train operating companies allocated slots are expected to commence operations in the first quarter of 2027.
Water, bulk infrastructure, and permitting: licensing reform and WULA performance are becoming investable enablers
Sponsors in bulk water and municipal services need two things for bankability: credible regulation and predictable permitting. Q3 progress includes continued preparations for the National Water Resources Infrastructure Agency (NWRIA), backed by completion of an infrastructure asset register and transition arrangements, with establishment targeted for April 2026 (subject to appointments). It also includes the Water Services Amendment Bill process and the development of a licensing framework intended to strengthen regulation and clarify roles between Water Service Authorities and Water Service Providers, with the operating licence system for water service providers designed and draft regulations completed.
On permitting, Operation Vulindlela is explicit that the Water Use Licence Application reforms aim to cut turnaround time from a baseline of over 300 days to 90 days and that a functional WULA system is core to building investor confidence. For sponsors, that is directly linked to construction start risk and schedule certainty in water-intensive and land-intensive projects.
The OV report also highlights practical contracting support: standardised documentation to help municipalities contract services to reduce water losses and the push to advance performance-based contracts for non-revenue water into procurement and implementation.
Spatial development: land and public asset release is becoming more programmatic
For mixed-use sponsors (including CoJ/JPC pipelines and similar metro-led programmes), spatial integration reforms matter when they translate into released land, standard processes, and faster transactions. Operation Vulindlela reports that DPWI established a Strategic and Special Delivery Unit responsible for fast-tracking key infrastructure projects, auditing publicly owned land and buildings, and developing a standard land release methodology to accelerate release and ensure public-interest outcomes. This is an important enabling shift for projects where the land assembly and release mechanism is the critical path.
How this shows up in real project pipelines
In practice, the “priority sectors” sponsors are pursuing are already visible in the market: Badirammogo Water Association’s projects in Limpopo (bulk water), mixed-use developments led by CoJ/JPC, renovations by DPWI, DHA border projects, and the DoT’s ambitious rail-related pipeline. The point is not that all of these are immediately bankable; it’s that the reform agenda is increasingly aligned to the exact blockers that typically prevent these pipelines from reaching procurement and financial close.
The biggest constraint remains project preparation funding to reach bankability
Even with better rules and institutional frameworks and stronger funding instruments, the binding constraint for most sponsors remains the poor availability of project preparation funding to take projects from concept through feasibility, structuring, and transaction readiness to bankability.
The Infrastructure Fund is well staffed and has been capacitated to assist, but there is still a large gap between the number of projects that are strategic priorities and the number that can be prepared to lender/investor standards within realistic timeframes.
For sponsors, this gap is often where “award” momentum stalls—because the legal, financial, and permitting workstreams are underfunded, fragmented, or sequenced too late.
What project sponsors should do in 2026
Treat BFI alignment as a funding strategy, not a compliance exercise
The bond programme is explicitly tied to financing BFI projects, and Treasury intends ongoing taps to fund further BFI-aligned projects. Sponsors should structure their project narratives, readiness evidence, and funding asks to fit the BFI logic early.
Build a bankability plan immediately after award and run workstreams in parallel
Lock a single integrated plan covering permits, affordability, risk allocation, technical readiness, and lender requirements—then run legal, technical, and financing tracks in parallel to avoid late-stage rework.
Solve project preparation funding upfront
Ring-fence preparation budgets early (technical, legal, financial model, lender DD) and pursue blended approaches where possible. Treat preparation funding as a “go/no-go” gate, not an afterthought.
Use Operation Vulindlela milestones as your risk register
Electricity market rules, grid allocation, water licensing, WULA timelines, logistics concessions and open access—these reforms are changing the risk profile of projects. Sponsors should map dependencies against these milestones and reflect them in scheduling, conditions precedent, and lender disclosures (for example, grid access and trading rules in energy-adjacent projects; WULA timelines in water-intensive developments; corridor performance and port/rail reforms for logistics-driven demand).
Package documents to lender norms from the start
Tighten the risk matrix, performance measures, termination mechanics, and operational processes early. Bankability usually fails on documentation coherence, not on project intent.
2026 is not just about “more infrastructure” as a theme—it is about a more connected system of reforms and instruments that can convert priorities into financeable projects. National Treasury’s bond issuance and the reconfigured BFI process are increasingly reinforcing one another, while Operation Vulindlela’s reform milestones are directly targeting the network and approvals constraints that have historically undermined project bankability.
For PPP project sponsors, the winners in 2026 will be those who treat project preparation as the main battle: govern it tightly, and align it early to BFI and available funding and the reform-driven realities of electricity, logistics, water licensing, and land release.
Maano Capital is an authourised FSP (55112) and registered credit provider (NCRCP22459)
